Toronto market turned on its head as flood of listings overwhelms buyers

May 19, 2017

Toronto real estate agent Davelle Morrison recently bought a truckload of modern chairs, crisp bed linens and stylish lamps. She had to, she says, because the surge in listings in the Greater Toronto Area has sucked up all of the furniture normally used to make properties look as appealing as possible.

The stagers who place the furniture are so overbooked that Ms. Morrison had to track down an interior designer with some time to spare. “One furniture rental company had to shut down,” she says.

Ms. Morrison says she invested in her own stock of furniture because she’s going to need it for other properties in the pipeline. This is just one weird twist in a market that has been turned on its head.

Agents are also reporting price cuts for some listings, bidding delirium for others, and a swarm of investors looking for deals.

After holding on to their rapidly appreciating asset for so long, some sellers in the Greater Toronto Area appear to be rushing headlong to cash in. Buyers who lamented that there were so few listings now seem incapacitated by the amount of choice.

“I think they’re overwhelmed – there are so many houses to look at,” says Ms. Morrison of Bosley Real Estate Ltd. “No matter what neighbourhood they want to be in, there are so many houses to look at.”

In another harbinger of change, Ms. Morrison has also started receiving phone calls that are strange to her ears: Listing agents are pleading for her to bring her house hunting clients to their properties.

Ms. Morrison recently listed a duplex for sale in the posh enclave of Moore Park. It’s the kind of property that appeals to both investors and those who want to live in half of the house while renting out the rest.

“No agents booked showings,” she says.

Quite a few did go through the agents’ open house, however, and one brought a client who promptly made a “bully” offer – which means the potential buyer refused to wait for the scheduled offer deadline. Ms. Morrison says her client decided not to take the bully bid and wait instead to see what happens at the table on offer night. The indecision in the market has agents perplexed: showings are down but bullies can be as aggressive as ever.

Another wrinkle, Ms. Morrison says, is that house hunters are so accustomed to competing in multiple offers, they are flummoxed by houses that are actually available to buy.

Buyers are not attuned to “offers any time,’” she says.

Ms. Morrison listed a duplex for sale at 137 George St. in downtown Toronto with an asking price of $1.26-million. When it didn’t sell within days, buyers began to wonder what’s wrong with the house. They were interested in the location and the property, she says, but they became wary when there wasn’t a bidding frenzy.

“How often do you get houses that are walking distance to the St. Lawrence Market?” she says in disbelief.

She recently generated a new round of showings when she cut the asking price to $1.199-million.

Sellers, she believes, figure the time is right to take some profits after a stunning run-up in prices over several years.

“I’m going to cash out and make a move,” she says of the sellers’ psychology.

At the same time, not all properties are being stifled. Ms. Morrison knows of one house that was listed with an asking price of $1-million plus. It sold for $1.6-million, she says, when in her opinion it should have sold for $1.3-million.

“I don’t see how it will appraise,” she says, figuring that a lender will be hesitant to provide the financing.

But some sellers have waited too long, she believes. Those who might have received eight offers earlier in the year may now get only two.

“Some of the sellers are greedy and they just want more and more and more,” she says. “We’re in a new market now – you can’t expect the moon.”

Figures from the Toronto Real Estate Board show that new listings surged by 33.6 per cent in April compared with April, 2016. That compares with sales in the earlier part of the spring when listings had plummeted 50 per cent from the same time last year.

TREB reports that the average price jumped by 25 per cent in the GTA in April from the same month last year.

The market shifted gears at about the same time three levels of government were holding confabs to decide whether they needed to take action to curb runaway price growth in Toronto and surrounding communities. In April, the Ontario government brought in a cluster of new policies, including a 15 per cent tax on purchases by foreign buyers.

Christopher Bibby of ReMax Hallmark Bibby Group Realty Ltd. has seen both sides of the patchy market.

This week he sold an Ossington Avenue penthouse that drew seven offers and sold for $230,000 above the asking price of $999,900. The unit is very spacious unit with an unobstructed view and a terrace, Mr. Bibby says, and buyers tend to step up for such rare properties. On the same day, he reduced the price on another listing by five per cent.

Never has he seen more investors out looking for deals, says Mr. Bibby, who specializes in the condo market.

“A month ago everyone is in a panic about a lack of inventory and unaffordable properties,” he says. “Now we have a surplus and buyers are hesitant.”

Ira Jelinek of Harvey Kalles Real Estate Ltd. says his own business has slowed after a fast start to the year. He was so busy in the first few months of 2017 that he didn’t have time to prospect for new clients. Now he’s building up the pipeline again.

Mr. Jelinek thinks it’s too early to tell if a malaise has settled over the market or if there’s any broad slowdown. “If anything it’s just a psychological change.”

He says some people can choose to sit on the sidelines but those who have recently sold their existing house or are having another child or another life change may not be able to. For those reasons, he expects properties will continue to change hands. Sellers who have a fantastic location and the correct asking price will still attract buyers, he says.

The condo segment of the market continues to see brisk trading even as some single-family homes languish.

Mr. Jelinek recently sold a two-bedroom condo unit at 33 Bay St. for $930,000 after listing it for sale with an asking price of $869,000. The 930-square-foot unit drew three offers.

He believes that many condo buyers are looking at the amount they would pay in rent for a similar unit and figuring they might as well buy and pay down some principal on a mortgage, he says.

“Money is still cheap on the street,” he says of the low level of interest rates.

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